THE PREMIER BUILDING SOCIETY PROSECUTIONS.

Evening Star, Issue 8407, 7 January 1891, Page 4

THE PREMIER BUILDING SOCIETY PROSECUTIONS.

[Prom (Rna Melbourne Correspondent.] Wednesday, December 31. The prosecutions in connection with the Premier Permanent Building and Investment Association were brought to a conclusion so far as the present criminal sittings of the Supreme Court are concerned last week. The most serious charge against the directors and others of conspiracy’to defraud the Association by means of large advances, made on improper and insufficient security, resulted in the acquittal of the accused with the exception of John E. Gourlay (land speculator and member of the Association’s Board) and William Doherty (accountant of the Association), iu regard to whom the jury could not come to an agreement. Six of the defendants—John Nimmo, M.L.A., John Stewart (directors), James Mirams (manager), Robert J. Murphy, Bernard J. Murphy, and Phillip Ccrkill (contractors)— were therefore discharged, while Gourlay and Doherty were remanded until the next sessions to undergo a fresh trial. In regard to Messrs Nimmo and Stewart the jury

mentioned that they left the Court “ without a scintilla of a stain upon their characters,” and His Honor the Chief Justlcc concurred in this expression of opinion. The jury engaged la this trial have had a most unenviable experience. They were kept secluded for forty eight hours while they were making up their minds as to a verdict, spending Christmas Eve, the whole of Christmas Day, and half of Boxing Day away from their families, and the trial occupied thirty days. Their fees varied from L6O 10s to Ufj2 each, but could not compensate for the Inconvenience which they must have Ht in being cooped up for such a long period to investigate one of the most awkward cases that have been heard in the Victorian Court. Une of the jurymen gives the following interesting account as to what took place in the jury room after the summing up of f'e judge: —“We retired at noon on Wednesday, and very soon came to a unanimous agreement that Nimmo and Stewart ought to be acquitted. Three of us from the start were in favor of the acquittal of the whole of the defendants. Of course we had been discussing the case all along among ourselves. Tte three for a complete acquittal refused at first to to find Nimmo and Stewart not guilty unless the whole of the other prisoners were also acquitted. But after some talk we consented to the acquittal of Nimmo and Stewart unconditionally. Then we struck off the names of the other defendants one by one—Mirams, Robert Murphy, and Corkill —until only Doherty, Gonrlay, and Bernard Murphy remained. At four o’clock on Wednesday afternoon there were five of the jury in favor of the acquittal of all the prisoners, whilst seven stood out for the conviction of Gourlay, Doherty, and Bernard Murphy. The question in dispute was narrowed down to whether, when Gourlay received a cheque for L 40.218 from Doherty, and it was paid into Gourlay’s account, they knew whether the society had any security. We wanted to be home for Christmas, and agreed among ourselves that if the Chief Justice directed us that Gourlay and Doherty knew there was no security those in favor of an acquittal should give way ; and if the contrary, that those standing out for a conviction should consent to a verdict of ‘Not guilty.’ The judge read over the evidence on the point to us, and his direction was practically in favor of the contention of the minority. Three of the seven gave way, but the other four Would not abide by their agreement. Shortly before midnight on Wednesday our numbers Were eight to four. We could not shift those who wanted to convict some of the prisoners, and when the judge called us into Court again, after midnight on Thursday morning, we were still in the proportion of two-thirds to one-third. W T e felt we could do no more that night. Some of ua were very tired, and turned in. The superintendent of the Law Courts (Mr Arundel) had promised very comfortable quarters for ns in the tower. The rest of the jury made up a couple of card parties. We had two bottles of whisky between us for a nightcap, and most of us did not go to bed at all. About six o’clock on Christmas morning we started arguing the case again, and by seven o’clock we had got three of the minority over to our side. The foreman, Patrick Cullen, was the only one that held out. No argument could move him. fle said he had taken an oath to do his duty to his God and his country, and would not budge an inch. He was evidently a very religious man, for about once every three times he used to turn off by himself and pray for divine guidance. The answer to his prayers was invariably in support of his conviction. When the judge called us into Court at ten on Christmas morning we were of the same opinion as when we gave our final verdict on Friday afternoon. Bernard Murphy had been pat amongst the acquittals, and it was 11 to 1 for the acquittal of Gourlay and Doherty as well. About noon on Christmas Day we were driven out in three cabs to Hslf Moon Bay, below Sandringham, and enjoyed a stroll along the beach. We were in charge of two attendants, who had been sworn in not to allow anyone to talk to us or interfere with ns in any way. About six o’clock we got back to the courts, and had a good Christmas diuner—roast goose, plum pudding, and British beer. After dinner we had some singing, and if we had not been so tired from the night before we would have spent a very jolly evening. As it was we went to bed early. At 6,30 on Friday morning we were up again, and did oar utmost to psrsaade the foreman to yield. I can tell you it was pretty warm at times. Some of ns told him pretty plainly what we thought, fle got so excited that he broke a stick he had in his hand. Cullen said :‘ 1 have strong convictions, and I won’t give in for anybody.’ We might have been locked up till doomsday before he agreed to an acquittal. We pointed out to him the great expense of another trial, bat it was all of no use. 1 might say that we bad no question whatever as to the innocence of Nimmo and Stewart, but we had a doubt abont the others, and gave them the benefit of it. I hope I may never be on such a jury again.” Doherty and Mirams were sentenced on the charges of having made false entries in the books and balance-sheet of the Association.

The specific charge against Doherty was of unlawfully, wilfully, and with intent to defrand making a false entry in the Savings Bank ledger of the society of the sum of L 346 17s 6d, as having been paid into the Association on the 20th December, ISS7, to his credit. On being asked whether he had anything to say why sentence shonld not be passed npon him, he spoke, under deep emotion, as follows : “ YoUr Honor, —1 wish to add a few words to the address already delivered by Dr Madden on my behalf. When those shares were applied for by me, I asked for 500 of them, and paid the premium of LI per share and 2s 6d per share application. One hundred and eleven of those shares were sold, and on this charge Island. I understood it was the universal opinion in the office—and 1 think, in Melbourne—that shares, when so much had been paid on them—when 2s 6d application had been paid on them—l understood them honestly to be my property, and that I could dispose of them and sell them. That is my honest belief. I may say that scores of people—shareholders—have done the same thing ; and without mentioning names, there was one of the leading stockbrokers of the city who sold, I think, over LBOO of his own shares in the market, and with the money he received paid the balance due to the Association. I understood there was nothing wrong or criminal in it, and I did so. fAt this point Doherty was so overcome by bis feelings that be had ' to make a long pause.] 1 may mention that the directors issued a balance-sheet in 1887 in which the liabilities to the shareholders were stated. The application fees on the HI shares were credited to me as a shareholder, and the premiums also on the 111 shares. 1 may say that, with the knowledge that such was the case, and firmly believing it, I declare in the presence of my God I thought it was honest.” His Honor, in passing sentence, said:

*' The facts you have now mentioned were brought forward on your behalf at both trials, and on the first trial they produced 1 efficient influence with the jury as to sead to a division of opinion. They were again brought forward at the second

trial, and the jury, having considered them on that occasion, agreed against you. It was stated at both trials that the practice and belief to which you have referred prevailed and existed in this Association as well apparently as outside the Association. It was stated by counsel, it has been reby your counsel, and now it is for the third time repeated by yourself that, according to a practice which existed in this Association, as well as outside this Association, interests in shares on which payments had been made ftere deemed, and were, in fact, subject of actual sales in the market as sales of the Association. If yon had been found by the jury to have sold that interest on those shares, as the case may be, undoubtedly the jury would have regarded your case as one coming within the general practice. The jury have found that you did not sell your shares. They have found you took the money which was tendered across the counter of the o&ce by a person who desired to become a shareholder—that you took that lady’s money Which was intended by her to purchase shares of the Association and not yonr shares, and you took that, and entered it ih the books, or concurred in entering it in the books—there is little distinction between the two—as your money, and not the money of the Association. It would be regretted if the view which you have repeatedly put forward on this subject could be supposed to be a view which has not been considered and not been adjudged upon by the jury. They have found you did not sell this property which you believed to be yours, and on which you had paid a certain amount. They find you did not sell this, but that you sold—you and your brother clerks sold—shares of the Association to a purchaser who asked for and paid for shares of the Association, and having received that lady’s money for shares of the Association you appropriated it to yourself by that entry in the books of the Association. The cases are wholly distinct, It is difficult to conceive how an officer standing in the position in which you stood—having the experience which you had, exercising the control and direction which yon did over subordinate officers in that institution—could have conceived that yon would be justified in common honesty to your employers in suggesting to those officers that they should sell across the counter of that office shares of the Association as though they were your shares, And yet that is the effect of the suggestion you make to them. The words you use to those officers would not have a very clear meaning unless you intended to suggest that the shares shonld be sold to applicants in front of the counter. That was the meaning in which they with your knowledge, and with your ratification immediately subsequent, acted—the suggestion on which they acted. And you co-operated with them ; and you derived, or would suppose you were deriving, assistance from their concurrence in your act, in depriving the Association of its money and putting it into your own pocket—the substantial and real effect of your act. Your offence is, I think, an exceedingly grave one, rendered all the more grave from the fact of the position in which you stood, and from the influence which you exercised over your subordinate officers. The practice in this office appears to have been, not in one, but in many respects grossly irregular. The practice of transferring shares in this office, and the mode in which they were transferred on some occasions, was very irregular, and to that extent only—that an irregular practice was presented to you which you might imitate —to that extent only, and to a very small extent, can be found any excuse for your conduct as it has been determined by the jury. The Court has been asked to award a punishment which would enable you to be freed from the ordinary consequences of a criminal act. This application has been based on grounds which have been decided upon by the jury, and by whose decision lam bound. Had you occupied a humbler position in this office, and had done some act, there would be no one to ask that you should atone for your offence by the payment of a sum of money, and not by imprisonment ; and it is my duty to mete out equal justice to those who stand in a high position as to those who stand in a humble position. I find no ground on which I should be justified in acceding to this application. An application has been made to the Full Court, on which that Court will decide, and for the purpose of saving you from any possible hurt that might arise from the setting aside of the judgment by the Full Court, I will only pass the judgment which I am now about to deliver, and I will respite execution of the judgment in order to enable that application to be made. The sentence of the Court in respect to the finding of the jury on each count is that you be imprisoned in Her Majesty’s gaol at Melbourne for the term of eighteen calendar months, the sentence on each count to be concurrent. Execution will be respited until the hearing by the Full Court of the application already made on your behalf and adjourned. You are awarded imprisonment only because the state of your health would seem to require that no more severe conditions should be attached to the imprisonment, Some precise time will have to be fixed for the application to the Full Court.

The charge on which Mirams had been found guilty was of making false entries in a balance-sheet for the year ending September, 1888, with intent to defraud. He intimated that he had nothing to urge beyond what was stated in a document which he had previously laid before the Court. The document comprised sixty sheets of closely written quarto, and was accompanied by tabulated statements of accounts. Mr Mirams urged that the balance-sheet in question was prepared entirely by Doherty and a clerk named Spellman, with the exception of three items which be bad supplied himself. His Honor bad directed the jury that the expert evidence with regard to these three items did not clearly show Mr Mirama’s items to be false, and he was therefore convicted for falsifying a statement which was prepared not by him but by Doherty, Moreover, he had not countersigned the balance-sheet until it had been certified as correct by the auditors. He was convicted for a criminal act performed by his subordinate, because by a legal theory he was held responsible for the act of that subordinate. But the act done by Doherty was not even a criminal act in itself, and it was necessary before it conld be criminal that it must be done with intent to defraud. How could it be argued then that the act was done by him (Mirams) with intent to defraud when the evidence showed that it was not done by him really, and when he was only held to have done it through the theory of responsibility ? He could have had no intent to defraud by means of false entries when be never knew that those entries wire false, and when they were made not by his hand but by Doherty’s. The arguments that had been used against him were all based on the theory that the society was insolvent on September 29, 1888. That theory was absolutely false,|and the leading counsel for the prosecution had himself said in bis opening speech that the society was in the zenith of its prosperity when the applications for loans were made by Murphy and Corkill, in May and June of the same year. He was charged with having inflated the balance-sheet, but the figures given by the prosecution inflated it to a far greater extent; and it had been shown that one entry in his balance sheet, which was made by inadvertence, actually made it appear that the liabilities of the Association were greater by L 20.000 than they really were. The fact that the society had to close its doors in December, 1889, because there was a ran on its deposits and it conld not get the temporary assistance it required, was no proof that it was insolvent in September, 1888. There had been no attempt to assert or to prove that he had ever touched one penny of the millions entrusted to his care. He was conscious that it was no occasion on which to make an appeal to sentiment, or he might speak of his past career and of his character and his long and active service in the community, of the loss in fortune and in public favor which he and his family had already suffered. He might speak also of the cruel length of the prosecution and of the recommendation to mercy of the jury. However, he would urge no such considerations, but would take his stand on justice alone.

Passing sentence, His Honor said : “Mr Mirams, I have a most painful duty pow to perform. It is increased by the sense that

what I am about to say to you will not be accepted by you. I have read the document which you have forwarded to me with care, and I have weighed the arguments which you have put forward in it; and that document and the address you made to the jury at the trial convinces me that you are iu the position of a person who will not look at the facts, and who is determined not to consider that it may be possible he has done wrong. Your legal I certainly cannot agree with. Your differences of opinion on the facts, from the jury, 1 am not at liberty to weigh. It is not the fact, Mr Mirams, that you have been convicted of an offence for the act of another, and for which that other had been acquitted. You have been convicted of an offence committed by yourself, and by no other person. It was your duty, and the duty of no other person, to prepare general statement, not merely, as yoll suggest, of assets and liabilities, but of assets and liabilities and of other particulars, and to present that general statement, countersigned by you after it had been attested by the auditors, to the shareholders of this Association. You were bound by the highest obligations under which a man could rest to commiuioate the truth, the whole truth, and nothing but the truth in that document to that mu ti ule who were dependent on your vigilance and your truthfulness for protection against possible loss from fraud or any other causes of injury to them. You think you were at liberty to select three subjects for inquiry and to decline to accept responsibility for all the other items in that general statement which consisted of more than merely liabilities and assets. Yen could not do so. No doubt you had a right to hand over the statement for preparation from the books—for information to be searched for and tabulated by another person ; but you were responsible for what that other person did. You were not justified in putting a single figure into that document unless and until you had satisfied yourself of its correctness, and you must be held—you have been held—responsible, and ought to be held responsible, for the falsity, in fact, of certain items contained in that general balancesheet. I cannot follow you into the consideration of the question whether the jury on the falsity of those items have been or have not been correct. That is a matter with which I have not to deal. The jury have found that there were items in that balancesheet—items put forward on your behalf as being innocent because they appeared on both sides of the account, and merely amounted, as was said, to an inflation of figures. The jury have considered that question, and they have found that it was not inflation of both sides of the account, but that it was a false entry on each side of the account. And they have also found, Mr Mirams—and this is an essential ingredient in your offence—that you, being responsible for that general balance-sheet, and having signed it and presented it to the meeting of shareholders, did that with intent to defraud. Now, what is the meaning of that ? lam glad to state that it is intent markedly different from that which the man who sits by your side (Doherty) has been found guilty of on a similar charge. You did not aim at putting money in your pocket. You had not that sordid, corrupt, vile purpose of taking money from the Association and putting it into your pocket. And the jury have intimated clearly to my mind that that was their opinion in the recommendation they have submitted on your behalf to myself. Nevertheless, your act was fraudulent. You appear to cherish the belief that your Association was not in difficulties at that time, flow you could think so I cannot compre* hend. You even venture to present the dishonor of a cheque for upwards of 1,30,000 across the counter of a bank as no evidence of insolvency, but the.t it is only evidence of an unwillingness or inability of a bank to lend money to a customer. I cannot even conceive the condition of mind that presents an argument of that kind. The jury cannot believe it. They believe, as indeed I think must be manifest to everyone who has heard the evidence given at a later date, and to which you refer in this statement, that at that time your society was in the utmost risk and danger of ruin. It might have been just possible to say that, and it was because of that uncertainty that the true character of your offence, and the effect of your offence, became more apparent. But if you had told the truth to the shareholders at that meeting in 1888—if you had told them that, it is highly possible the result would have been immediate ruin. That would have been far better than ruin delayed for a year, and at a cost certainly more than LIOO.OOO resulting from the delay. Possibly, also, the truth moderately, calmly told and accompanied by a new course of action suggested by you, and enforced by you prior to that meeting, might have preserved to that society the benefit of your services—your long and, until six months before that time, most valuable services might have stved that Association from ruin. But at the time you were making false entries in that general statement for the purpose of blinding the shareholders in the consideration of their affairs, and so leading them to throw more money into the abyss which was yawning around them—at the time you were doing this a demand was made by others for your removal. And your removal was not followed by anything but increased injury and danger and loss to the society. The truth is, Mr Mirams—and it is clearly apparent, if it could be made apparent to yourself the truth is that your neglect of your duties for six months before this time has been the cause of this terrible disaster. It has spread wide ruin among thousands whom you were bound to protect. It has caused it must have caused widespread distrust among numberless persons, who would be disposed and are disposed to avail themselves of the great benefits conferred by institutions of that kind. You appear to have been engaged in affairs of your own, and to have had your attention exclusively directed to them, so that you were unable to exercise the control which you ought to have exercised over your subordinates. The result was utter disorder, to say the leastutter disorder in the society whose interests you had to guard. The fact that you left with an officer whom you unwisely trusted, blindly trusted, blank cheques that might be filled up without reference or report to you, or examination by you, was a fact that I think, taken by itself, ought to open your own eyes to a jnster sense of the great mistake you committed. Mistake, I will again say; and, more than that, an offence, but an offence quite free from the imputation of sordid, corrupt desire for money gaining. The Court has been applied to to mete out in yonr case punishment by fine, and not by imprisonment. Your position before the public of Victoria; your public services as a public representative in Victoria, and to Victoria ; your ability in building up this institution ; and your unsullied fame for a long period of years, have been presented to the Court, and have greatly but not unduly influenced it. I only wish I could give it more influence. Another argument has been presented which I daresay you are aware is common to your case, and that of a very large number of persons who stand in your position. It is the unhappy results that follow to your family, as well as to yourself, from the administration of the law. That is an argument which every court of justice has to close its ears to on almost every occasion in which a criminal offence requires to be punished. And if I could shut my eyes to the effect of your original mistake —the effect of your negligence, for it is negligence from which sprang everything in your case—if I could shut my eyes to the effects of that negligence and the consequent danger of an inadequate punishment for the offence which sprang from that negligence—l should be glad indeed to accede to the suggestion that has been made tome. Bat 1 cannot do so. This has not been merely a long series of trials, bat it has been a series of trials which fix and arrest public attention. And I think it is due to every one of those who have suffered from your misconduct, as well as to the general body of the people of Victoria, that a sentence which cannot be supposed to be partial or influenced by any considerations of favor to yourself and respect for your antecedents or character and position should be awarded to your act. I remember the recommendations contained in the verdict of the jury, and remember distinctly also the difference between yourself and another who is charged with a similar offence, and bearing those two points in my mind the sentence of

the Court will be that you be imprisoned in Her Majesty’s gaol at Melbourne for a term of twelve calendar months.”

The hearing of all the cases connected with this unfortunate society has extended over 110 days, and as far as can be estimated the expenditure upon law costs has been from L 30,000 to L 35.000. Of this about two-thirds will in all likelihood come ont of the general revenue. The Bar have reaped a very rich harvest. Mr Purves, Q.C., is credited with having secured, both out of the prosecution and defence, not less than L 6,500; Mr Donovan, L 3,250; Mr Coldham, L 2.700; and Mr Bayles, LI,BOO. Dr Madden is said to have been the only really heavily feed barrister for the defence, his share amounting to between L 3,000 and L 4.000.